Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

DEBT

Short-Term Debt

At September 30, 2023, September 30, 2022 and December 31, 2022, short-term debt consisted of the following:

	September 30, 2023				September 30, 2022				December 31, 2022
In millions	Balance Outstanding		Weighted Average Interest Rate(1)		Balance Outstanding		Weighted Average Interest Rate(1)		Balance Outstanding		Weighted Average Interest Rate(1)
NW Natural:
Commercial paper	$	—	—	%	$	53.0	3.3	%	$	170.2	4.6	%
Other (NW Holdings):
Credit agreement	71.0		6.4	%	88.0		4.7	%	88.0		5.3	%
NW Holdings	$	71.0			$	141.0			$	258.2

(1) Weighted average interest rate on outstanding short-term debt

Long-Term Debt

At September 30, 2023, September 30, 2022 and December 31, 2022, NW Holdings' long-term debt consisted of the following:

	September 30, 2023				September 30, 2022				December 31, 2022
In millions	Balance Outstanding		Weighted Average Interest Rate(1)		Balance Outstanding		Weighted Average Interest Rate(1)		Balance Outstanding		Weighted Average Interest Rate(2)
NW Natural first mortgage bonds	$	1,414.7	4.7	%	$	1,134.7	4.5	%	$	1,134.7	4.5	%
NW Holdings credit agreement	100.0		5.5	%	100.0		4.1	%	100.0		4.2	%
NWN Water credit agreement	50.0		5.7	%	50.0		4.1	%	50.0		4.2	%
NWN Water term loan	55.0		4.8	%	55.0		3.5	%	55.0		2.5	%
Other long-term debt	5.8				6.3				6.2
Long-term debt, gross	$	1,625.5			$	1,346.0			$	1,345.9
Less: unamortized debt issuance costs	10.2				8.4				9.0
Less: current maturities	190.7				50.6				90.7
Total long-term debt	$	1,424.6			$	1,287.0			$	1,246.2

(1) Weighted average interest rate for the nine months ended September 30, 2023 and September 30, 2022

(2) Weighted average interest rate for the year ended December 31, 2022

NW Natural's first mortgage bonds (FMBs) have maturity dates ranging from 2023 through 2053 and interest rates ranging from 2.8% to 7.9%. The credit agreements at NW Holdings and NWN Water have maturity dates in 2024 and the NWN Water term loan is due in 2026.

In August 2023, NW Natural retired $50.0 million of FMBs with an interest rate of 3.5%. An additional $40.0 million of FMBs with an interest rate of 5.6% are set to mature in November 2023. No other debt is scheduled to mature in the next 12 months as of September 30, 2023 at NW Natural.

Issuance of Long-Term Debt

In August 2023, NW Natural issued and sold $80.0 million aggregate principal amount of its FMBs, 5.18% Series and $50.0 million aggregate principal amount of its FMBs, 5.23% Series, to certain institutional investors pursuant to the Bond Purchase Agreement. The 5.18% Bonds bear interest at the rate of 5.18% per annum, payable semi-annually on February 4 and August 4 of each year, commencing February 4, 2024, and will mature on August 4, 2034. The 5.23% Bonds bear interest at the rate of 5.23% per annum, payable semi-annually on February 4 and August 4 of each year, commencing February 4, 2024, and will mature on August 4, 2038.

In March 2023, NW Natural issued and sold $100.0 million aggregate principal amount of 5.75% Secured Medium-Term Notes, Series B due 2033 (the Notes). The Notes bear interest at the rate of 5.75% per annum, payable semi-annually on March 15 and September 15 of each year.

In January 2023, NW Natural issued and sold $100.0 million aggregate principal amount of its FMBs, 5.43% Series due January 2053, to certain institutional investors pursuant to the Bond Purchase Agreement. The 5.43% Bonds bear interest at the rate of 5.43% per annum, payable semi-annually on January 6 and July 6 of each year, commencing July 6, 2023, and will mature on January 6, 2053.

In September 2022, NW Holdings entered into an 18-month credit agreement for $100.0 million and borrowed the full amount. The interest rate is based on the Secured Overnight Financing Rate (SOFR). The loan is due and payable on March 15, 2024. The credit agreement prohibits NW Holdings from permitting consolidated indebtedness to be greater than 70% of total capitalization, each as defined therein and calculated as of the end of each fiscal quarter. Failure to comply with this financial covenant would entitle the lenders to accelerate the maturity of the amounts outstanding under the credit agreement. NW Holdings was in compliance with this financial covenant as of September 30, 2023. In December 2022, NW Holdings entered into a swap to fix the interest rate on this debt beginning in January 2023 through the loan's maturity. See "Interest Rate Swap Agreements" below for more detail.

In September 2022, NWN Water entered into an 18-month credit agreement for $50.0 million and borrowed the full amount. The interest rate is based on the SOFR. The loan is due and payable on March 15, 2024. The credit agreement prohibits NWN Water and NW Holdings from permitting consolidated indebtedness to be greater than 70% of total capitalization, each as defined therein and calculated as of the end of each fiscal quarter. Failure to comply with this financial covenant would entitle the lenders to accelerate the maturity of the amounts outstanding under the credit agreement. NWN Water and NW Holdings were in compliance with this financial covenant as of September 30, 2023.

Interest Rate Swap Agreements

NW Holdings and NWN Water entered into interest rate swap agreements with major financial institutions that effectively converted variable-rate debt to a fixed rate. Interest payments made between the effective date and expiration date are hedged by the swap agreements. The notional amount, effective date, expiration date and benchmark rate of the swap agreements are shown in the table below:

In millions	Notional Amount		Effective Date	Expiration Date	Fixed Rate
NW Holdings	$	100.0	1/17/2023	3/15/2024	4.7	%
NWN Water	$	55.0	1/19/2023	6/10/2026	3.8	%

Fair Value of Long-Term Debt

NW Holdings' and NW Natural's outstanding debt does not trade in active markets. The fair value of debt is estimated using the value of outstanding debt at natural gas distribution companies with similar credit ratings, terms, and remaining maturities to NW Holdings' and NW Natural's debt that actively trade in public markets. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in the 2022 Form 10-K for a description of the fair value hierarchy.

The following table provides an estimate of the fair value of long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	September 30,				December 31,
In thousands	2023		2022		2022
NW Natural:
Gross long-term debt	$	1,414,700	$	1,134,700	$	1,134,700
Unamortized debt issuance costs	(10,147)		(8,229)		(8,823)
Carrying amount	$	1,404,553	$	1,126,471	$	1,125,877
Estimated fair value(1)	$	1,176,212	$	927,372	$	944,383
NW Holdings:
Gross long-term debt	$	1,625,545	$	1,345,968	$	1,345,851
Unamortized debt issuance costs	(10,245)		(8,348)		(8,987)
Carrying amount	$	1,615,300	$	1,337,620	$	1,336,864
Estimated fair value(1)	$	1,385,144	$	1,133,087	$	1,148,395

(1) Estimated fair value does not include unamortized debt issuance costs.